Broadcast Share of Political Ad-Spending Losing Ground to Digital

Borrell’s tracking of election ad spending shows digital media’s portion steadily rising to approach the broadcast share, Cassino said. BIA/Kelsey estimates $6.55 billion will be spent in local political spots in 2020, with broadcast TV getting 47 percent, or $3.08 billion, radio receiving $312 million, 4.8 percent, and digital outlets, $1.37 billion, 21 percent. Preliminary Borrell projections for 2020 show national broadcast TV and digital with total market share even closer in share, almost even. “Digital advertising has gone from nothing to something much more meaningful,” said Group M Global President-Business Intelligence Brian Wieser in an interview. He doesn’t see digital’s rising share as being as much of a problem: Numbers for broadcasting “are still pretty spectacular.”

A big reason for the rise of online political promotions is ad-buyers love the better targeting, results reporting and instant dissemination of digital media, Cassino said. Those are “so important in these days of sudden opportunities and shifts,” he said. Broadcasters are seeking to provide some of those same characteristics through ATSC 3.0, but the technology isn’t fully deployed. Broadcast campaigns have their own advantage over online media in that there are fewer scams for ad-buyers, Cassino said. Online scammers can create pages where thousands of ads run at the size of a pixel each, ostensibly earning clicks for advertisers but essentially invisible to page visitors, he said.

While most media attention will be focused on ads for the presidential race, local races and local markets will be an important focus of ad dollars this election season, several analysts told us. A lot of money will go “to a ton of state races,” said BIA/Kelsey Chief Economist Mark Fratrik. A protracted Democratic primary could add to the advertising spending, he said. “We are very bullish on the Democratic nomination process.” Larger donors will likely wait until the race narrows, to make sure their donations have as much impact as possible, analysts said. “The amount of political advertising will vary significantly from market to market based on the size of the market and specifics of local elections," BIA said. “The three top local political revenue generating markets” will be Los Angeles, Phoenix and Philadelphia.

The trend to increased spending with each presidential election is unlikely to change soon, Wieser said. Campaigns copy strategies of other campaigns, and seek to one-up each other, feeding into a cycle that increases ad dollars every year, he said. Cassino believes the unending rise in ad spending will eventually lead to rules capping such spending. There's also a finite amount of ad space, he said. “How many ads will people tolerate?” The limited amount of space doesn’t mean a limit to how high political ad spending goes, Wieser said. The limited real estate would simply drive prices even higher, he said.

The 2016 election featured lower-than-expected political ad spending not likely to be repeated in 2020, all the analysts said. The races so far this year have shown greatly increased outlays, Cassino said. Tucson's mayoral campaign generated nearly $500,000 in political ads, a vast increase over what was expected, Cassino said. This presidential race is expected to be very competitive, leading to more spending, Fratrik said.

The influx dollars doesn’t have much of an effect on station sales, said brokers, broadcasters and analysts. “Any really smart buyer will factor the potential for increased political sales in 2020 into their valuation,” said media broker Robert Heymann, of Media Services Group. Transactions take a fair amount of time to close now, Fratrik said. That makes sales intended to take advantage of a specific year’s political ad buy unlikely, he said.